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Dual Branding Strategy (a New

Trend in the Hospitality sector)


A study to verify if this strategy is potent to cause a positive and
breakthrough impact in the current scenario of hospitality sector.
-Utsav Negi (59)

Need and Significance of the Study:


The aim of this study is to understand the concept of Dual
Branding as a strategy, which can be beneficial and fruitful by its
application in the hospitality sector. As we know, the hospitality
sector is an ever-growing business in the current era. However,
due to easy access and continuous exhaustion of this sector, it is
reaching to a saturation stage. Many parent hotel chains are
continuously striving to form strategies that would present their
service as different and worth-every-penny. This study will go
through the impact dual-branding creates in this particular sector.
Also, this is a new approach being taken up by a quite a few big
names in the hotel industries like Accor, Marriot and Lemon Tree.
This approach is at a stage where it can be classified as
Experimental, and therefore has positive as well as negative
outcome after its execution. This study will look at all the phases
of dual branding in the hospitality sector and understand the
concept which is at a neo-stage.
Therefore, the aim of this study is to not only understand the
concept of dual branding, but to also find out whether this
strategy would really make an impact in the hospitality sector,

which still functions on a conservationist approach and a single


brand.

Brief Literature Review with citation:


1. A new trend in the hospitality sector, dual-branding, is
drawing strong industry interest, with developers and
operators trying to double up offerings at a single property.
Developers like the concept because it allows them to tie up
the market. Brands such as Marriott have been known to
locate different properties within sight of each other, making
two separate owners compete for guests. By going dualbrand, the developer can go after both the select-service
and extended-stay hotel customers with one property, with
less chance of local competition.
Dual-branding is popular today because of a lack of
available, affordable land and the increased costs for
construction, says Tye Turman, senior vice president of
lodging development for Marriotts Western region. However,
the strategy is more challenging in the beginning and his
firm has learned from mistakes along the way.
The challenge is that individual brands work hard to provide
different experiences, and two hotels in one can confuse
guests.
Bottom line, owners like dual-branding because it brings in
more guests; operators like it for efficiency and brands are
amenable to the strategy, but wary. Investors, however, are
united in their desire for the sites, says Erich Baum, a senior
vice president with HVS, a hotel valuation and consulting
firm in Boston. Baum has consulted on a few dual-brand

deals and investors believe the vehicle delivers tremendous


economic benefits from its diversification, he notes.
Buyers and investors love these properties because of their
better chance at cash flow, Baum says. If your point of
view is your return on investment, theres nothing not to like
about it.
(National Real Estate Investor)
2. Several hotel chains in India are exploring dual-branding,
where two different hotel brands are available at the same
property, in a move aimed at maximizing the returns from
increasingly expensive plots of land in urban markets.
"The concept helps to reduce risk by reaching out to a broad
range of potential guests," explained Patu Keswani, chairman
of Lemon Tree Hotels.
"Moreover, it helps in saving common costs like security,
finance, administrative costs, human resources and brings in
staff synergies," he told the Economic Times.
Accor Hotels recently opened a dual-branded PullmanNovotel property in Delhi's Aerocity and is planning another
dual-branded property in Chennai. Jean-Michel Casse, SVP
operations/India, concurred on the risk reduction strategy.
"Putting large inventory of the same category in one big land
parcel is a big challenge," he said. "So, once you map the
market and look at the potential customers and business
feasibility, you need to split the risk in two different brands
and different positioning."
(WARC advertising)
3. Dual-branded hotels are not a new idea; however, the trend
is gaining traction. Recent trends reflect a shift towards
greater sophistication in tailoring guest experiences and
targeting specific demand segments, thereby creating less
overhead and greater cost efficiency. The concept has
become increasingly popular as these developments include

two hotels, and in some cases even more, that share


construction/conversion costs and operational expenses,
resulting in attractive development savings as well as an
enhanced opportunity to achieve economic feasibility of a
proposed project.
The majority of newly-developed and under-construction
dual-branded hotel developments offer value enhancement
opportunities by cost-efficiently developing new products
within dense urban markets. However, many successful dualbranded hotels exist in airport markets as well as suburban
markets where supply is limited or demand is strong, such as
the Homewood Suites and Hampton Inn by Hilton located in
Syracuse/Liverpool, New York.
Dual-branded hotels eliminate the expense of constructing
separate towers for each brand while allowing for shared
amenities such as fitness centers, pools, and meeting rooms
as well as back-of-house spaces including kitchens, storage,
and mechanical areas.
Furthermore, from an operational perspective, efficiencies
are created through utilization of shared staff, specifically as
it relates to management, sales & marketing, and
maintenance.
(Boston Hospitality Review)
4. Intercontinental Hotels Group (IHG) has set out plans to open
a number of dual-branded hotel developments across the
USA, using combinations of a number of its brands.
According to IHG, the dual-branded model will allow for
operating efficiencies while at the same time not
compromising the distinct offerings of each brand.
While they will typically share the same building structure or
services such as fitness centers, pools and food & beverage
facilities, some back-of-the-house operations may also be
shared or separate.

Dual-branded hotels are attractive for our owners because


they are able to achieve construction cost savings, through
shared facilities such as meeting space, swimming pools,
fitness facilities and back-of-house areas, as well as
operational savings, through shared services, said Joel
Eisemann, chief development officer, the Americas, IHG.
(Hotelier Middle East)
5. Marketing of two or more similar and competing products by
the same firm under different and unrelated brands. While
these brands eat into each others sales (cannibalism), multibrand strategy does have some advantages as a means of:
(1) Obtaining greater shelf space and leaving little for
competitors' products
(2) Saturating a market by filling all price and quality gaps
(3) Catering to brand-switchers users who like to experiment
with different brands
(4) Keeping the firm's managers on their toes by generating
internal competition.
(Business Dictionary)
6. Marriott International Inc., the Bethesda, Maryland-based
luxury lodging service provider, opened its first dual branded
propertyCourtyard and Fairfieldin Bengaluru with an
investment of around Rs.300 crore.
Global luxury hotels have increased their focus on the Indian
market on account of growing demand coming in from tier II
and III cities. According to a September 2015 report released
by HVS Global Hospitality Services, a hospitality consulting
firm, demand for hotels is set to increase in 2016 as
occupancy rates were over 60% for the first time when
compared to the previous five year.
(Live Mint)
7. Putting large inventory of the same category in one big land
parcel is a big challenge. So, once you map the market and

look at the potential customers and business feasibility, you


need to split the risk in two different brands and different
positioning.
(The Economic Times)

Proposed Research Methodology:


Research Design - Descriptive
Sampling Method Quota Sampling, Convenience Sampling
Sample Size 50
Data Type - Primary, Secondary (Theoretical purposes)
References:
1. Carr, Robert (Feb 8,2016),Whats behind the dual brand hotel
trend?, National Real Estate Investor
http://nreionline.com/hotel/what-s-behind-dual-brand-hoteltrend
2. WARC advertising (Feb 16,2016), Hotels explore Dual
Branding
http://www.warc.com/LatestNews/News/Hotels_explore_dual_
branding.news?ID=36215
3. Poovanna, Sharan (Jan 28, 2016), Marriot launches its first
dual branded hotel in India, Live Mint E-paper
http://www.livemint.com/Companies/28hcBOfIR8RfeN5gVzSD
KN/Marriott-launches-its-first-dual-branded-hotel-inIndia.html
4. Daniel Lesser, Jonathan Jaeger, & Jeremy Gilston of LW
Hospitality Advisors (Jan 12, 2016), The Evolution of Dual
Branded Hotels, Business Practices, Boston Hospitality
Review

5.

http://www.bu.edu/bhr/2016/01/12/the-evolution-of-dualbranded-hotels-how-the-marriottstarwood-acquisitionenhances-opportunities-for-developers/
Business Dictionary